Global Economy Is Heading For A Broad-Based Recovery In 2018, Forecasts World Bank

01/10/2018

World Bank said that there was a broad based economic recovery underway in the world economy and predicts a global economic growth rate of 3.1 per cent for the year 2018 which is an increased prediction compared to what was made by it the last time in June past year when it predicted 2018 global economic growth rates to be 0.2 per cent lower. This announcement was made in the flagship Global Economic Prospects report by the Washington-based lender.

"2018 is on track to be the first year since the financial crisis that the global economy will be operating at or near full capacity," said the World Bank.

2016 saw the lowest growth rate in the global economy post the financial crisis when it was 2.4 per cent and the bank predicted a growth rate of 3 per cent ta have bene reached by the global economy in 2017. That would be the strongest growth rate since 2011.

The bank said that the broad-based recovery of the global economy was reflected in the growth of more than half of the world's economies in 2017.

The bank further expects that the growth rate for the global economy in 2018 would get reduced to 3 per cent in w2019 and down further to 2.9 per cent in 2020 from the anticipated 3.1 per cent in 2018.

Due ot the fact that most of the major central banks in the developed economies are most probably would slowly pull out the accommodative monetary policies, the bank expects the advanced economies to show moderate rate of growth of 2.2 per cent in 2018 compared to the 2.3 per cent in 2017.

It is estimated that there would be 2.3 per cent growth in 2017 in the U.S. economy due to stronger private investment. It is anticipated that the growth rate would further hasten to reach 2.5 percent in 2018 and thereafter slow down somewhat to an approximate 2.1 percent in 2019 and 2020.

The low corporate tax rate and the full expensing of new equipment would be the drivers for boosting of corporate investment following the approval of the new tax curtailment bill by the U.S. Congress, expects the World Bank. Because of the pace of monetary policy normalization might accelerate and because the U.S. economy is already at near full capacity would result in reduction of benefits of constrained fiscal stimulus, the World Bank warned.

The emerging economies are anticipated to grow at a rate of 4.5 per cent in 2018 compared to the expected rate of 4.3 per cent for 2017, the bank said. It further said that the rate of growth in these economies would be around 4.7 per cent in 2019 and 2020.

"The broad-based recovery in global growth is encouraging, but this is no time for complacency," said Jim Yong Kim, president of the World Bank, in a statement on Tuesday.

"This is a great opportunity to invest in human and physical capital. If policy makers around the world focus on these key investments, they can increase their countries' productivity, boost workforce participation, and move closer to the goals of ending extreme poverty and boosting shared prosperity," said Kim.